As will be appreciated, stock options are utilized by many companies not only to reward present employees for services provided, but also to entice new employee hires. Companies in the past have had difficulty in communicating with and educating employees as to the status of their stock options or other information relating to their stock options, since stock option plans vary significantly from company to company and involve complex tax, legal, and financial planning issues. Moreover, in order for an individual to make intelligent decisions as to what to do with his or her stock options, these tax and legal implications must be taken into consideration.
It is usually not up to the company itself to advise employees about tax and legal ramifications or in fact do much more than merely present the employee with their stock option agreement. If one is to try to provide a universal system to inform the employees about a stock option program, it is necessary to take into account each of the different companies' individual stock plans, which is difficult due to the diversity of the plans available.
As a result, companies do not at the present time provide education and training, or give information to their employees as to how to maximize the benefits of their stock options plans. Moreover, even if a company were to do so, tailoring the advice to an individual employee is oftentimes difficult because the company may or may not have sufficient information from the employee to provide reliable information.
Additionally, it will be appreciated that financial institutions oftentimes view an individual's stock options and other forms of equity compensation as a resource or source for attracting clients to address the kinds of needs for money management which these institutions can provide and which the client needs. Thus, there is a need for a system which will provide readily accessible information on an individual's particular situation both for the individual, for their employer, and the financial institutions seeking to attract clients who have equity compensation packages.
In short, there is an important need to address the option holder's personal finance and educational needs and company needs to provide education and training on stock options to help employees maximize their benefits and understand the corporate goals or the plan. While in the past the ability to provide individuals with advice tailored to their particular situation was done on a manual basis, there is a need to provide a more convenient way to get information to participants in stock options, stock purchase and restricted stock programs. Moreover, there is a need for interactive financial planning calculators and tools as well as informational content including articles, question and answer in FAQs form, glossary, and global tax guide, along with discussion forum and other interaction with experts. Also, a key environment is personal record keeping, which includes data related to option exercise, expiration, and vesting, and restricted stock vesting and expiration.
By way of further background and as will be appreciated, there are millions of people in the US and now overseas who participate in stock option plans. A need exists to provide not only senior executives, directors, and key employees at every public company with information related to their stock options or restricted stock, but also to provide such information throughout the workforce. Stock option grants have become broader and company-wide, making them an integral part of many employee's compensation. Of course, countless numbers of people also hold stock options in pre-IPO companies. As a result, participants in these plans are sitting on billions of dollars in options gains, representing much of the new wealth of this country. It will be appreciated that stock option revenues rival the amounts in qualified plans such as 401K plans and IRA's. Moreover, brokerage firms and financial advisors are in need of tools and content to reach these individuals to handle their stock plan transactions and manage their money. Individuals also let valuable in-the-money options expire, as they fail to monitor their option holdings, and may have options from multiple companies.
Note, few participants hold the stock option after exercise. For numerous reasons they take their option profit before the standard 10-year term and either diversify the money into alternative investments, meaning stock and mutual funds, buy high ticket items such as a cars, furniture and houses, or do things such as take vacations or use the monies for weddings or renovations of their homes. In short, these are the types of people, who the financial service companies and numerous other advertisers wish to reach and market their services.
Moreover, presently millions of people now look to the Internet as a prime source of personal financial and investment information. This trend is reshaping the financial services industry. The desire of the individual to take control over their financial future is both demonstrated and encouraged by the proliferation of investment and online brokerage websites.